Fully Fund the State Children's Health Insurance Program

Over the past decade the percentage of low-income American children who are uninsured has dropped by one-third, thanks in large part to the State Children’s Health Insurance Program (SCHIP), which Congress created in 1997.  And SCHIP, along with its sister program Medicaid, has accomplished this at reasonable cost:  these programs cost less per beneficiary than private insurance, on average.

In his new budget, President Bush proposes to reauthorize SCHIP, which is scheduled to expire this year.  But he fails to give states enough funds simply to maintain their current enrollment — let alone to expand coverage to the millions of low-income children who still lack it.

Under the President’s budget, states would have $7 billion less in federal SCHIP funding over the next five years than they need just to continue insuring as many beneficiaries as they do now.  By 2012, some 46 states would face a total shortfall of $2.9 billion.  That’s equivalent to the cost of covering 1.4 million children.

The President’s proposal comes as members of Congress of both parties are calling for strengthening SCHIP to make further progress toward covering all uninsured low-income children.  Many health care providers, insurers, religious organizations, and state governments agree that SCHIP should be expanded.

Right now, several states are implementing or planning SCHIP-funded expansions to reach more uninsured low-income children.  But if the federal government weakens its funding commitment, states — which pay roughly a third of all SCHIP costs — will have a much harder time strengthening their SCHIP programs.  Over time, many will likely end up reducing the number of children they cover.

In fact, one provision of the President’s budget is actually designed to induce states to curtail children’s coverage.  It would reduce the federal SCHIP matching rate for coverage of children with incomes above 200 percent of the poverty line, or roughly $34,000 for a family of three.   The budget says this change is designed to “refocus

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